About Quarterly Earnings Report Disclosures
| Item | Current | Prior | YoY % |
|---|---|---|---|
| Net Sales | ¥5.00B | ¥4.44B | +12.8% |
| Operating Income | ¥598M | ¥566M | +5.7% |
| Ordinary Income | ¥602M | ¥568M | +6.0% |
| Net Income Attributable to Owners | ¥372M | ¥397M | -6.3% |
| Total Comprehensive Income | ¥371M | ¥378M | -1.9% |
| Basic EPS | ¥69.25 | ¥73.88 | -6.3% |
| Diluted EPS | ¥73.67 | ¥73.67 | +0.0% |
| Dividend Per Share | ¥0.00 | ¥0.00 | - |
| Item | Current End | Prior End | Change |
|---|---|---|---|
| Total Assets | ¥5.55B | ¥5.38B | +¥168M |
| Total Equity | ¥3.87B | ¥3.66B | +¥207M |
| Owners' Equity | ¥3.84B | ¥3.63B | +¥204M |
| Item | Value |
|---|---|
| Net Profit Margin | 7.4% |
| Item | YoY Change |
|---|---|
| Net Sales YoY Change | +12.8% |
| Operating Income YoY Change | +5.7% |
| Ordinary Income YoY Change | +5.9% |
| Net Income Attributable to Owners YoY Change | -6.4% |
| Total Comprehensive Income YoY Change | -1.7% |
| Item | Value |
|---|---|
| Shares Outstanding (incl. Treasury) | 5.48M shares |
| Treasury Stock | 89K shares |
| Average Shares Outstanding | 5.38M shares |
| Book Value Per Share | ¥718.42 |
| Item | Amount |
|---|---|
| Q2 Dividend | ¥0.00 |
| Year-End Dividend | ¥37.00 |
| Item | Forecast |
|---|---|
| Net Sales Forecast | ¥9.75B |
| Operating Income Forecast | ¥1.00B |
| Ordinary Income Forecast | ¥990M |
| Net Income Attributable to Owners Forecast | ¥580M |
| Basic EPS Forecast | ¥107.98 |
| Dividend Per Share Forecast | ¥19.00 |
This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.
Verdict: Solid topline growth with modest operating profit increase but margin compression and a decline in bottom line point to mixed quality in FY2026 Q2. Revenue rose 12.8% YoY to 50.04, while operating income increased 5.7% YoY to 5.98 and ordinary income was 6.02 (+5.9% YoY). Net income declined 6.4% YoY to 3.72, dragging the net margin to 7.4%. The operating margin is approximately 12.0% (5.98/50.04), down about 80 bps from roughly 12.8% a year ago, indicating negative operating leverage. With assets at 55.47 and equity at 38.70, financial leverage is a conservative 1.43x, supporting a calculated ROE of 9.6% via DuPont. Asset turnover stands at 0.902 (50.04/55.47), suggesting decent capital efficiency for an IT/services-oriented model. The divergence between operating income growth (+5.7%) and net income decline (-6.4%) implies higher tax/non-operating drag or mix shifts below operating income. Cash flow metrics are unreported; hence, earnings quality can’t be validated via OCF/NI or FCF coverage. Implied equity ratio is strong at ~69.7% (38.70/55.47), though debt details are unreported. EPS (basic) is 69.25 yen; the reported payout ratio is 54.5%, implying a roughly mid- to high-30s yen DPS, though DPS itself is unreported. ROIC is listed at 10.8%, comfortably above the 8% benchmark, indicating efficient deployment of invested capital. The quarter’s key achievements are robust sales growth and double-digit operating margin, offset by margin compression and weaker bottom-line growth. In the absence of cash flow disclosure, sustainability of earnings and dividend coverage cannot be confirmed. Forward-looking, maintaining double-digit operating margins while re-accelerating profit growth will hinge on cost discipline and stabilizing below-the-line items. The strong balance sheet provides resilience to invest for growth without overstretching leverage. Overall, the print is operationally respectable but with caution flags around margin pressure and earnings quality verification.
ROE decomposition (DuPont): ROE = Net Profit Margin × Asset Turnover × Financial Leverage = 7.4% × 0.902 × 1.43 ≈ 9.6%. The most notable component change versus last year appears to be margin, as operating margin fell ~80 bps (from ~12.8% to ~12.0%), while revenue grew faster than operating income and asset turnover is reasonable at 0.90 (prior-year turnover not disclosed to confirm directionality). Business drivers: revenue growth outpaced operating income, implying higher SG&A intensity, cost inflation, or revenue mix dilution; non-operating/tax factors also pressured net profit. Sustainability: topline momentum looks intact, but the margin compression suggests cost normalization or competitive pricing; absent explicit cost line disclosures, we treat margin pressure as a manageable but ongoing risk rather than a one-off. Concerning trends to flag include negative operating leverage (OP +5.7% vs revenue +12.8%) and net income declining despite higher ordinary income, indicating below-the-line headwinds.
Revenue growth of +12.8% YoY to 50.04 indicates solid demand and/or successful expansion initiatives. Operating income grew +5.7% YoY to 5.98, lagging revenue and signaling cost pressure or mix effects. Ordinary income (+5.9% YoY) broadly tracks operating income, but net income fell -6.4% YoY to 3.72, suggesting higher taxes, minority interests, or other non-operating items weighed on the bottom line. Operating margin compressed by ~80 bps to ~12.0%; net margin is 7.4%. EPS (basic) is 69.25; diluted EPS is reported at 73.67, which is atypically above basic—this may reflect period differences or share count dynamics rather than true dilution and merits issuer clarification. With asset turnover at 0.902 and ROIC at 10.8%, the company shows reasonable efficiency, supporting the medium-term growth thesis if margins stabilize. Outlook hinges on controlling SG&A and procurement costs, monetizing new offerings without discounting, and neutralizing below-the-line drags.
Balance sheet quality appears strong with equity of 38.70 against total assets of 55.47, implying an equity ratio around 69.7%. Current ratio, quick ratio, and debt metrics are unreported, so short-term liquidity and leverage can’t be quantified precisely. No warning on Current Ratio < 1.0 or D/E > 2.0 can be made due to missing data; however, low financial leverage (1.43x) suggests conservative capital structure. Maturity mismatch risk cannot be assessed as short-term debt and current assets are unreported. No off-balance sheet obligations are disclosed in the provided data.
Operating cash flow and free cash flow are unreported, so OCF/Net Income and FCF coverage cannot be assessed. Consequently, we cannot validate earnings quality via cash conversion nor evaluate working capital dynamics (receivables, inventory, payables) for potential timing effects. Given net income declined while operating income rose, we would normally cross-check cash taxes and non-cash items; this remains a data gap.
The reported payout ratio is 54.5%, within a generally sustainable range (<60%) if cash generation is healthy. DPS is unreported; the payout ratio against EPS (basic 69.25) implies a rough DPS on the order of high-30s yen, but this inference should be treated cautiously. Without OCF/FCF disclosure, we cannot confirm FCF coverage of dividends or capex. Balance sheet strength (equity ratio ~69.7%) provides some buffer, but sustainability ultimately depends on cash conversion and capex intensity.
Business Risks:
Financial Risks:
Key Concerns:
Key Takeaways:
Metrics to Watch:
Relative Positioning: Within the Japanese small/mid-cap IT/services cohort, the company shows above-benchmark capital efficiency (ROIC ~10.8%) and a strong equity buffer, but trails best-in-class peers on margin resilience this quarter due to negative operating leverage and a decline in net income.
This analysis was auto-generated by AI. Please note the following: